labor law cases ii

8/12/2019 Labor Law Cases II

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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 71813 July 20, 1987

ROSALINA PEREZ ABELLA/HDA. DANAO-RAMONA, petitioners,vs.THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, ROMEO QUITCO and RICARDODIONELE, SR., respondents.

PARAS, J .:

This is a petition for review on certiorari of the April 8, 1985 Resolution of the Ministry of Labor andEmployment affirming the July 16, 1982 Decision of the Labor Arbiter, which ruled in favor of grantingseparation pay to private respondents.

On June 27, 1960, herein petitioner Rosalina Perez Abella leased a farm land in Monteverde, NegrosOccidental, known as Hacienda Danao-Ramona, for a period of ten (10) years, renewable, at her option, foranother ten (10) years (Rollo, pp. 16-20).

On August 13, 1970, she opted to extend the lease contract for another ten (10) years ( Ibid , pp. 26-27).

During the existence of the lease, she employed the herein private respondents. Private respondent RicardoDionele, Sr. has been a regular farm worker since 1949 and he was promoted to Cabo in 1963. On the otherhand, private respondent Romeo Quitco started as a regular employee in 1968 and was promoted to Cabo inNovember of the same year.

Upon the expiration of her leasehold rights, petitioner dismissed private respondents and turned over the

hacienda to the owners thereof on October 5, 1981, who continued the management, cultivation andoperation of the farm (Rollo, pp. 33; 89).

On November 20, 1981, private respondents filed a complaint against the petitioner at the Ministry of Laborand Employment, Bacolod City District Office, for overtime pay, illegal dismissal and reinstatement withbackwages. After the parties had presented their respective evidence, Labor Arbiter Manuel M. Lucas, Jr., ina Decision dated July 16, 1982 ( Ibid , pp. 29-31), ruled that the dismissal is warranted by the cessation ofbusiness, but granted the private respondents separation pay. Pertinent portion of the dispositive portion ofthe Decision reads:

In the instant case, the respondent closed its business operation not by reason of business reversesor losses. Accordingly, the award of termination pay in complainants' favor is warranted.

WHEREFORE, the respondent is hereby ordered to pay the complainants separation pay at the rateof half-month salary for every year of service, a fraction of six (6) months being considered one (1)year. (Rollo pp. 29-30)

On appeal on August 11, 1982, the National Labor Relations Commission, in a Resolution dated April 8,1985 ( Ibid , pp. 3940), affirmed the decision and dismissed the appeal for lack of merit.

On May 22, 1985, petitioner filed a Motion for Reconsideration ( Ibid , pp. 41-45), but the same was denied ina Resolution dated June 10, 1985 ( Ibid , p. 46). Hence, the present petition ( Ibid , pp. 3-8).

The First Division of this Court, in a Resolution dated September 16, 1985, resolved to require therespondents to comment ( Ibid , p. 58). In compliance therewith, private respondents filed their Comment onOctober 23, 1985 ( Ibid , pp. 53-55); and the Solicitor General on December 17, 1985 ( Ibid , pp. 71-73-B).

On February 19, 1986, petitioner filed her Consolidated Reply to the Comments of private and publicrespondents ( Ibid , pp. 80-81).

The First Division of this Court, in a Resolution dated March 31, 1986, resolved to give due course to thepetition; and to require the parties to submit simultaneous memoranda ( Ibid ., p. 83). In compliance therewith,the Solicitor General filed his Memorandum on June 18, 1986 ( Ibid , pp. 89-94); and petitioner on July 23,1986 ( Ibid , pp. 96-194).


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The petition is devoid of merit.

The sole issue in this case is

WHETHER OR NOT PRIVATE RESPONDENTS ARE ENTITLED TO SEPARATION PAY.

Petitioner claims that since her lease agreement had already expired, she is not liable for payment ofseparation pay. Neither could she reinstate the complainants in the farm as this is a complete cessation orclosure of a business operation, a just cause for employment termination under Article 272 of the LaborCode.

On the other hand, the legal basis of the Labor Arbiter in granting separation pay to the private respondentsis Batas Pambansa Blg. 130, amending the Labor Code, Section 15 of which, specifically provides:

Sec 15 Articles 285 and 284 of the Labor Code are hereby amended to read as follows:

x x x x x x x x x

Art. 284. Closure of establishment and reduction of personnel . The employer may also terminatethe employment of any employee due to the installation of labor-saving devices, redundancy,retrenchment to prevent losses or the closing or cessation of operation of the establisment orundertaking unless the closing is for the purpose of circumventing the provisions of this title, byserving a written notice on the workers and the Ministry of Labor and Employment at least one (1)month before the intended date thereof. In case of termination due to the installation of labor-savingdevices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent toat least his one (1) month pay or to at least one (1) month pay for every year of service, whichever ishigher. In case of retrenchment to prevent losses and in cases of closure or cessation of operationsof establishment or undertaking not due to serious business losses or financial reverses, theseparation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for everyyear of service whichever is higher. A fraction of at least six (6) months shall be considered one (1)whole year. 1avvphi1

There is no question that Article 284 of the Labor Code as amended by BP 130 is the law applicable in thiscase.

Article 272 of the same Code invoked by the petitioner pertains to the just causes of termination. The Labor Arbiter does not argue the justification of the termination of employment but applied Article 284 as amended,which provides for the rights of the employees under the circumstances of termination.

Petitioner then contends that the aforequoted provision violates the constitutional guarantee againstimpairment of obligations and contracts, because when she leased Hacienda Danao-Ramona on June 27,1960, neither she nor the lessor contemplated the creation of the obligation to pay separation pay to workersat the end of the lease.

Such contention is untenable.

This issue has been laid to rest in the case of Anucension v. National Labor Union (80 SCRA 368-369[1977]) where the Supreme Court ruled:

It should not be overlooked, however, that the prohibition to impair the obligation of contracts is notabsolute and unqualified. The prohibition is general, affording a broad outline and requiringconstruction to fill in the details. The prohibition is not to read with literal exactness like amathematical formula for it prohibits unreasonable impairment only. In spite of the constitutionalprohibition the State continues to possess authority to safeguard the vital interests of its people.Legislation appropriate to safeguard said interest may modify or abrogate contracts already in effect.For not only are existing laws read into contracts in order to fix the obligations as between the partiesbut the reservation of essential attributes of sovereign power is also read into contracts as apostulate of the legal order. All contracts made with reference to any matter that is subject toregulation under the police power must be understood as made in reference to the possible exerciseof that power. Otherwise, important and valuable reforms may be precluded by the simple device ofentering into contracts for the purpose of doing that which otherwise maybe prohibited. ...

In order to determine whether legislation unconstitutionally impairs contract of obligations, nounchanging yardstick, applicable at all times and under all circumstances, by which the validity ofeach statute may be measured or determined, has been fashioned, but every case must bedetermined upon its own circumstances. Legislation impairing the obligation of contracts can be


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sustained when it is enacted for the promotion of the general good of the people, and when themeans adopted must be legitimate, i.e. within the scope of the reserved power of the state construedin harmony with the constitutional limitation of that power. (Citing Basa vs. Federacion Obrera de laIndustria Tabaquera y Otros Trabajadores de Filipinas [FOITAF] [L-27113], November 19, 1974; 61SCRA 93,102-113]).

The purpose of Article 284 as amended is obvious-the protection of the workers whose employment is

terminated because of the closure of establishment and reduction of personnel. Without said law, employeeslike private respondents in the case at bar will lose the benefits to which they are entitled for the thirtythree years of service in the case of Dionele and fourteen years in the case of Quitco. Although they wereabsorbed by the new management of the hacienda, in the absence of any showing that the latter hasassumed the responsibilities of the former employer, they will be considered as new employees and theyears of service behind them would amount to nothing.

Moreover, to come under the constitutional prohibition, the law must effect a change in the rights of theparties with reference to each other and not with reference to non-parties.

As correctly observed by the Solicitor General, Article 284 as amended refers to employment benefits to farmhands who were not parties to petitioner's lease contract with the owner of Hacienda Danao-Ramona. Thatcontract cannot have the effect of annulling subsequent legislation designed to protect the interest of theworking class.

In any event, it is well-settled that in the implementation and interpretation of the provisions of the LaborCode and its implementing regulations, the workingman's welfare should be the primordial and paramountconsideration. (Volshel Labor Union v. Bureau of Labor Relations, 137 SCRA 43 [1985]). It is the kind ofinterpretation which gives meaning and substance to the liberal and compassionate spirit of the law asprovided for in Article 4 of the New Labor Code which states that "all doubts in the implementation andinterpretation of the provisions of this Code including its implementing rules and regulations shall be resolvedin favor of labor." The policy is to extend the applicability of the decree to a greater number of employeeswho can avail of the benefits under the law, which is in consonance with the avowed policy of the State togive maximum aid and protection to labor. (Sarmiento v. Employees Compensation Commission, 144 SCRA422 [1986] citing Cristobal v. Employees Compensation Commission, 103 SCRA 329; Acosta v. Employees

Compensation Commission, 109 SCRA 209).

PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the July 16, 1982 Decision of theLabor Arbiter and the April 8, 1985 Resolution of the Ministry of Labor and Employment are hereby

AFFIRMED.

SO ORDERED.

Teehankee, C.J., Yap, Fernando, Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Feliciano, Gancayco,Padilla, Bidin, Sarmiento and Cortes, JJ., concur.


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Manila

FIRST DIVISION

G.R. No. L-48926 December 14, 1987

MANUEL SOSITO, petitioner,vs.AGUINALDO DEVELOPMENT CORPORATION, respondent.

CRUZ, J .:

We gave due course to this petition and required the parties to file simultaneous memoranda on the solequestion of whether or not the petitioner is entitled to separation pay under the retrenchment program of theprivate respondent.

The facts are as follows:

Petitioner Manuel Sosito was employed in 1964 by the private respondent, a logging company, and was incharge of logging importation, with a monthly salary of P675.00, 1 when he went on indefinite leave with the consent of thecompany on January 16, 1976. 2 On July 20, 1976, the private respondent, through its president, announced aretrenchment program and offered separation pay to employees in the active service as of June 30, 1976, whowould tender their resignations not later than July 31, 1976. The petitioner decided to accept this offer and sosubmitted his resignation on July 29, 1976, "to avail himself of the gratuity benefits" promised. 3 However, hisresignation was not acted upon and he was never given the separation pay he expected. The petitionercomplained to the Department of Labor, where he was sustained by the labor arbiter. 4 The company was orderedto pay Sosito the sum of P 4,387.50, representing his salary for six and a half months. On appeal to the NationalLabor Relations Commission, this decision was reversed and it was held that the petitioner was not covered by theretrenchment program. 5 The petitioner then came to us.

For a better understanding of this case, the memorandum of the private respondent on its retrenchmentprogram is reproduced in full as follows:

July 20, 1976

Memorandum To: ALL EMPLOYEES

Re: RETRENCHMENT PROGRAM

As you are all aware, the operations of wood-based industries in the Philippines for the lasttwo (2) years were adversely affected by the worldwide decline in the demand for and pricesof logs and wood products. Our company was no exception to this general decline in themarket, and has suffered tremendous losses. In 1975 alone, such losses amounted to nearlyP20,000,000.00.

The company has made a general review of its operations and has come to the unhappydecision of the need to make adjustments in its manpower strength if it is to survive. This isindeed an unfortunate and painful decision to make, but it leaves the company no alternativebut to reduce its tremendous and excessive overhead expense in order to prevent anultimate closure.

Although the law allows the Company, in a situation such as this, to drastically reduce itmanpower strength without any obligation to pay separation benefits, we recognize the needto provide our employees some financial assistance while they are looking for other jobs.

The Company therefore is adopting a retrenchment program whereby employees who are inthe active service as of June 30, 1976 will be paid separation benefits in an amountequivalent to the employee's one-half (1/2) month's basic salary multiplied by his/her years ofservice with the Company. Employees interested in availing of the separation benefits offeredby the Company must manifest such intention by submitting written letters of resignation tothe Management not later than July 31, 1976. Those whose resignations are accepted shallbe informed accordingly and shall be paid their separation benefits.

After July 31, 1976, this offer of payment of separation benefits will no longer be available.Thereafter, the Company shall apply for a clearance to terminate the services of such


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number of employees as may be necessary in order to reduce the manpower strength tosuch desired level as to prevent further losses.

(SGD.) JOSE G. RICAFORT

President

N.B.

For additional information and/or resignation forms, please see Mr. Vic Maceda or Atty. Ben Aritao. 6

It is clear from the memorandum that the offer of separation pay was extended only to those who were in theactive service of the company as of June 30, 1976. It is equally clear that the petitioner was not eligible forthe promised gratuity as he was not actually working with the company as of the said date. Being onindefinite leave, he was not in the active service of the private respondent although, if one were to betechnical, he was still in its employ. Even so, during the period of indefinite leave, he was not entitled toreceive any salary or to enjoy any other benefits available to those in the active service.

It seems to us that the petitioner wants to enjoy the best of two worlds at the expense of the private

respondent. He has insulated himself from the insecurities of the floundering firm but at the same time woulddemand the benefits it offers. Being on indefinite leave from the company, he could seek and try otheremployment and remain there if he should find it acceptable; but if not, he could go back to his former workand argue that he still had the right to return as he was only on leave.

There is no claim that the petitioner was temporarily laid off or forced to go on leave; on the contrary, therecord shows that he voluntarily sought the indefinite leave which the private respondent granted. It isstrange that the company should agree to such an open-ended arrangement, which is obviously one-sided.The company would not be free to replace the petitioner but the petitioner would have a right to resume hiswork as and when he saw fit.

We note that under the law then in force the private respondent could have validly reduced its work force

because of its financial reverses without the obligation to grant separation pay. This was permitted under theoriginal Article 272(a), of the Labor Code, 7 which was in force at the time. To its credit, however, the companyvoluntarily offered gratuities to those who would agree to be phased out pursuant to the terms and conditions of itsretrenchment program, in recognition of their loyalty and to tide them over their own financial difficulties. The Courtfeels that such compassionate measure deserves commendation and support but at the same time rules that itshould be available only to those who are qualified therefore. We hold that the petitioner is not one of them.

While the Constitution is committed to the policy of social justice and the protection of the working class, itshould not be supposed that every labor dispute will be automatically decided in favor of labor. Managementalso has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fairplay. Out of its concern for those with less privileges in life, this Court has inclined more often than nottoward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has notblinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of the

established facts and the applicable law and doctrine.

WHEREFORE, the petition is DISMISSED and the challenged decision AFFIRMED, with costs against thepetitioner.

SO ORDERED.

Teehankee, C.J., Narvasa, Paras and Gancayco, JJ., concur.


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Manila

SECOND DIVISION

G.R. No. 101761. March 24, 1993.

NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONSCOMMISSION and NBSR SUPERVISORY UNION, (PACIWU) TUCP, respondents.

Jose Mario C. Bunag for petitioner.

The Solicitor General and the Chief Legal Officer, NLRC, for public respondent.

Zoilo V. de la Cruz for private respondent.

D E C I S I O N

REGALADO, J p:

The main issue presented for resolution in this original petition for certiorari is whether supervisoryemployees, as defined in Article 212 (m), Book V of the Labor Code, should be considered as officers ormembers of the managerial staff under Article 82, Book III of the same Code, and hence are not entitled toovertime rest day and holiday pay.

Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned andcontrolled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and Batangas.The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50. 1 Privaterespondent union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery, namely,the Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor, SeniorFinancial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior Financial/Budget

Analyst, Shift Boiler Supervisor,, Shift Operations Chemist, Shift Electrical Supervisor, General ServicesSupervisor, Instrumentation Supervisor, Community Development Officer, Employment and TrainingSupervisor, Assistant Safety and Security Officer, Head and Personnel Services, Head Nurse, PropertyWarehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Day MaintenanceSupervisor and Motorpool Supervisor.

On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from rank-and-file to department heads. The JE Program was designed to rationalized the duties and functions of all

positions, reestablish levels of responsibility, and recognize both wage and operational structures. Jobs wereranked according to effort, responsibility, training and working conditions and relative worth of the job. As aresult, all positions were re-evaluated, and all employees including the members of respondent union weregranted salary adjustments and increases in benefits commensurate to their actual duties and functions.

We glean from the records that for about ten years prior to the JE Program, the members of respondentunion were treated in the same manner as rank-and file employees. As such, they used to be paid overtime,rest day and holiday pay pursuant to the provisions of Articles 87, 93 and 94 of the Labor Code as amended.With the implementation of the JE Program, the following adjustments were made: (1) the members ofrespondent union were re-classified under levels S-5 to S-8 which are considered managerial staff forpurposes of compensation and benefits; (2) there was an increase in basic pay of the average of 50% oftheir basic pay prior to the JE Program, with the union members now enjoying a wide gap (P1,269.00 permonth) in basic pay compared to the highest paid rank-and-file employee; (3) longevity pay was increasedon top of alignment adjustments; (4) they were entitled to increased company COLA of P225.00 per month;(5) there was a grant of P100.00 allowance for rest day/holiday work.

On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was organizedpursuant to Republic Act NO. 6715 allowing supervisory employees to form their own unions, as thebargaining representative of all the supervisory employees at the NASUREFCO Batangas Sugar Refinery.

Two years after the implementation of the JE Program, specifically on June 20, 1990, the members of hereinrespondent union filed a complainant with the executive labor arbiter for non-payment of overtime, rest dayand holiday pay allegedly in violation of Article 100 of the Labor Code.


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On January 7, 1991, Executive Labor Arbiter Antonio C. Pido rendered a decision 2 disposing as follows:

"WHEREFORE, premises considered, respondent National Sugar refineries Corporation is hereby directedto

1. pay the individual members of complainant union the usual overtime pay, rest day pay and holiday payenjoyed by them instead of the P100.00 special allowance which was implemented on June 11, 1988; and

2. pay the individual members of complainant union the difference in money value between the P100.00special allowance and the overtime pay, rest day pay and holiday pay that they ought to have received fromJune 1, 1988.

All other claims are hereby dismissed for lack of merit.

SO ORDERED."

In finding for the members therein respondent union, the labor ruled that the along span of time during whichthe benefits were being paid to the supervisors has accused the payment thereof to ripen into contractualobligation; at the complainants cannot be estopped from questioning the validity of the new compensation

package despite the fact that they have been receiving the benefits therefrom, considering that respondentunion was formed only a year after the implementation of the Job Evaluation Program, hence there was noway for the individual supervisors to express their collective response thereto prior to the formation of theunion; and the comparative computations presented by the private respondent union showed that theP100.00 special allowance given NASUREFCO fell short of what the supervisors ought to receive had theovertime pay rest day pay and holiday pay not been discontinued, which arrangement, therefore, amountedto a diminution of benefits.

On appeal, in a decision promulgated on July 19, 1991 by its Third Division, respondent National LaborRelations Commission (NLRC) affirmed the decision of the labor arbiter on the ground that the members ofrespondent union are not managerial employees, as defined under Article 212 (m) of the Labor Code and,therefore, they are entitled to overtime, rest day and holiday pay. Respondent NLRC declared that thesesupervisory employees are merely exercising recommendatory powers subject to the evaluation, review andfinal action by their department heads; their responsibilities do not require the exercise of discretion andindependent judgment; they do not participate in the formulation of management policies nor in the hiring orfiring of employees; and their main function is to carry out the ready policies and plans of the corporation. 3Reconsideration of said decision was denied in a resolution of public respondent dated August 30, 1991. 4

Hence this petition for certiorari, with petitioner NASUREFCO asseverating that public respondentcommission committed a grave abuse of discretion in refusing to recognized the fact that the members ofrespondent union are members of the managerial staff who are not entitled to overtime, rest day and holidaypay; and in making petitioner assume the "double burden" of giving the benefits due to rank-and-fileemployees together with those due to supervisors under the JE Program.

We find creditable merit in the petition and that the extraordinary writ of certiorari shall accordingly issue.

The primordial issue to be resolved herein is whether the members of respondent union are entitled toovertime, rest day and holiday pay. Before this can be resolved, however it must of necessity be ascertainedfirst whether or not the union members, as supervisory employees, are to be considered as officers ormembers of the managerial staff who are exempt from the coverage of Article 82 of the Labor Code.

It is not disputed that the members of respondent union are supervisory employees, as defined employees,as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which reads:

"(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and executemanagement policies and/or to hire, transfer, suspend, lay-off, recall, discharged, assign or disciplineemployees. Supervisory employees are those who, in the interest of the employer effectively recommend

such managerial actions if the exercise of such authority is not merely routinary or clerical in nature butrequires the use of independent judgment. All employees not falling within any of those above definitions areconsidered rank-and-file employees of this Book."

Respondent NLRC, in holding that the union members are entitled to overtime, rest day and holiday pay, andin ruling that the latter are not managerial employees, adopted the definition stated in the aforequotedstatutory provision.

Petitioner, however, avers that for purposes of determining whether or not the members of respondent unionare entitled to overtime, rest day and holiday pay, said employees should be considered as "officers or


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members of the managerial staff" as defined under Article 82, Book III of the Labor Code on "WorkingConditions and Rest Periods" and amplified in Section 2, Rule I, Book III of the Rules to Implement the LaborCode, to wit:

"Art. 82 Coverage. The provisions of this title shall apply to employees in all establishments andundertakings whether for profit or not, but not to government employees, managerial employees, fieldpersonnel, members of the family of the employer who are dependent on him for support, domestic helpers,

persons in the personal service of another, and workers who are paid by results as determined by theSecretary of Labor in Appropriate regulations.

"As used herein, 'managerial employees' refer to those whose primary duty consists of the management ofthe establishment in which they are employed or of a department or subdivision thereof, and to other officersor members of the managerial staff." (Emphasis supplied.)

xxx xxx xxx

'Sec. 2. Exemption. The provisions of this rule shall not apply to the following persons if they qualify forexemption under the condition set forth herein:

xxx xxx xxx

(b) Managerial employees, if they meet all of the following conditions, namely:

(1) Their primary duty consists of the management of the establishment in which they are employed or of adepartment or subdivision thereof:

(2) They customarily and regularly direct the work of two or more employees therein:

(3) They have the authority to hire or fire other employees of lower rank; or their suggestions andrecommendations as to the hiring and firing and as to the promotion or any other change of status of otheremployees are given particular weight.

(c) Officers or members of a managerial staff if they perform the following duties and responsibilities:

(1) The primary duty consists of the performance of work directly related to management policies of theiremployer;

(2) Customarily and regularly exercise discretion and independent judgment;

(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of themanagement of the establishment in which he is employed or subdivision thereof; or (ii) execute undergeneral supervision work along specialized or technical lines requiring special training, experience, orknowledge; or (iii) execute under general supervision special assignments and tasks; and

(4) Who do not devote more 20 percent of their hours worked in a work-week to activities which are notdirectly and closely related to the performance of the work described in paragraphs (1), (2), and above."

It is the submission of petitioner that while the members of respondent union, as supervisors, may not beoccupying managerial positions, they are clearly officers or members of the managerial staff because theymeet all the conditions prescribed by law and, hence, they are not entitled to overtime, rest day andsupervisory employees under Article 212 (m) should be made to apply only to the provisions on LaborRelations, while the right of said employees to the questioned benefits should be considered in the light ofthe meaning of a managerial employee and of the officers or members of the managerial staff, ascontemplated under Article 82 of the Code and Section 2, Rule I Book III of the implementing rules. In otherwords, for purposes of forming and joining unions, certification elections, collective bargaining, and so forth,the union members are supervisory employees. In terms of working conditions and rest periods andentitlement to the questioned benefits, however, they are officers or members of the managerial staff, hencethey are not entitled thereto.

While the Constitution is committed to the policy of social justice and the protection of the working class, itshould not be supposed that every labor dispute will be automatically decided in favor of labor. Managementalso has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fairplay. Out of its concern for those with less privileges in life, this Court has inclined more often than nottoward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has notblinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of theestablished facts and the applicable law and doctrine. 5


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This is one such case where we are inclined to tip the scales of justice in favor of the employer.

The question whether a given employee is exempt from the benefits of the law is a factual one dependent onthe circumstances of the particular case, In determining whether an employee is within the terms of thestatutes, the criterion is the character of the work performed, rather than the title of the employee's position.6

Consequently, while generally this Court is not supposed to review the factual findings of respondentcommission, substantial justice and the peculiar circumstances obtaining herein mandate a deviation fromthe rule.

A cursory perusal of the Job Value Contribution Statements 7 of the union members will readily show thatthese supervisory employees are under the direct supervision of their respective department superintendentsand that generally they assist the latter in planning, organizing, staffing, directing, controlling communicatingand in making decisions in attaining the company's set goals and objectives. These supervisory employeesare likewise responsible for the effective and efficient operation of their respective departments. Morespecifically, their duties and functions include, among others, the following operations whereby theemployee:

1) assists the department superintendent in the following:a) planning of systems and procedures relative to department activities;

b) organizing and scheduling of work activities of the department, which includes employee shiftingscheduled and manning complement;

c) decision making by providing relevant information data and other inputs;

d) attaining the company's set goals and objectives by giving his full support;

e) selecting the appropriate man to handle the job in the department; and

f) preparing annual departmental budget;

2) observes, follows and implements company policies at all times and recommends disciplinary action onerring subordinates;

3) trains and guides subordinates on how to assume responsibilities and become more productive;

4) conducts semi-annual performance evaluation of his subordinates and recommends necessary action fortheir development/advancement;

5) represents the superintendent or the department when appointed and authorized by the former;

6) coordinates and communicates with other inter and intra department supervisors when necessary;

7) recommends disciplinary actions/promotions;

8) recommends measures to improve work methods, equipment performance, quality of service and workingconditions;

9) sees to it that safety rules and regulations and procedure and are implemented and followed by allNASUREFCO employees, recommends revisions or modifications to said rules when deemed necessary,and initiates and prepares reports for any observed abnormality within the refinery;

10) supervises the activities of all personnel under him and goes to it that instructions to subordinates areproperly implemented; and

11) performs other related tasks as may be assigned by his immediate superior.

From the foregoing, it is apparent that the members of respondent union discharge duties andresponsibilities which ineluctably qualify them as officers or members of the managerial staff, as defined inSection 2, Rule I Book III of the aforestated Rules to Implement the Labor Code, viz.: (1) their primary dutyconsists of the performance of work directly related to management policies of their employer; (2) theycustomarily and regularly exercise discretion and independent judgment; (3) they regularly and directly assist


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the managerial employee whose primary duty consist of the management of a department of theestablishment in which they are employed (4) they execute, under general supervision, work alongspecialized or technical lines requiring special training, experience, or knowledge; (5) they execute, undergeneral supervision, special assignments and tasks; and (6) they do not devote more than 20% of their hoursworked in a work-week to activities which are not directly and clearly related to the performance of their workhereinbefore described.

Under the facts obtaining in this case, we are constrained to agree with petitioner that the union membersshould be considered as officers and members of the managerial staff and are, therefore, exempt from thecoverage of Article 82. Perforce, they are not entitled to overtime, rest day and holiday.

The distinction made by respondent NLRC on the basis of whether or not the union members are managerialemployees, to determine the latter's entitlement to the questioned benefits, is misplaced and inappropriate. Itis admitted that these union members are supervisory employees and this is one instance where thenomenclatures or titles of their jobs conform with the nature of their functions. Hence, to distinguish themfrom a managerial employee, as defined either under Articles 82 or 212 (m) of the Labor Code, is puerile andin efficacious. The controversy actually involved here seeks a determination of whether or not thesesupervisory employees ought to be considered as officers or members of the managerial staff. Thedistinction, therefore, should have been made along that line and its corresponding conceptual criteria.

II. We likewise no not subscribe to the finding of the labor arbiter that the payment of the questioned benefitsto the union members has ripened into a contractual obligation.

A. Prior to the JE Program, the union members, while being supervisors, received benefits similar to therank-and-file employees such as overtime, rest day and holiday pay, simply because they were treated in thesame manner as rank-and-file employees, and their basic pay was nearly on the same level as those of thelatter, aside from the fact that their specific functions and duties then as supervisors had not been properlydefined and delineated from those of the rank-and-file. Such fact is apparent from the clarification made bypetitioner in its motion for reconsideration 8 filed with respondent commission in NLRC Case No. CA No. I-000058, dated August 16, 1991, wherein, it lucidly explained:

"But, complainants no longer occupy the same positions they held before the JE Program. Those positionsformerly classified as 'supervisory' and found after the JE Program to be rank-and-file were classifiedcorrectly and continue to receive overtime, holiday and restday pay. As to them, the practice subsists.

"However, those whose duties confirmed them to be supervisory, were re-evaluated, their duties re-definedand in most cases their organizational positions re-designated to confirm their superior rank and duties.Thus, after the JE program, complainants cannot be said to occupy the same positions." 9

It bears mention that this positional submission was never refuted nor controverted by respondent union inany of its pleadings filed before herein public respondent or with this Court. Hence, it can be safelyconcluded therefrom that the members of respondent union were paid the questioned benefits for the reasonthat, at that time, they were rightfully entitled thereto. Prior to the JE Program, they could not be categoricallyclassified as members or officers of the managerial staff considering that they were then treated merely on

the same level as rank-and-file. Consequently, the payment thereof could not be construed as constitutive ofvoluntary employer practice, which cannot be now be unilaterally withdrawn by petitioner. To be consideredas such, it should have been practiced over a long period of time, and must be shown to have beenconsistent and deliberate. 10

The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed tocontinue giving the benefits knowingly fully well that said employees are not covered by the law requiringpayment thereof. 11 In the case at bar, respondent union failed to sufficiently establish that petitioner hasbeen motivated or is wont to give these benefits out of pure generosity.

B. It remains undisputed that the implementation of the JE Program, the members of private respondentunion were re-classified under levels S-5 S-8 which were considered under the program as managerial staffpurposes of compensation and benefits, that they occupied re-evaluated positions, and that their basic paywas increased by an average of 50% of their basic salary prior to the JE Program. In other words, after theJE Program there was an ascent in position, rank and salary. This in essence is a promotion which is definedas the advancement from one position to another with an increase in duties and responsibilities asauthorized by law, and usually accompanied by an increase in salary. 12

Quintessentially, with the promotion of the union members, they are no longer entitled to the benefits whichattach and pertain exclusively to their positions. Entitlement to the benefits provided for by law requires priorcompliance with the conditions set forth therein. With the promotion of the members of respondent union,they occupied positions which no longer met the requirements imposed by law. Their assumption of thesepositions removed them from the coverage of the law, ergo, their exemption therefrom.


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As correctly pointed out by petitioner, if the union members really wanted to continue receiving the benefitswhich attach to their former positions, there was nothing to prevent them from refusing to accept theirpromotions and their corresponding benefits. As the saying goes by, they cannot have their cake and eat ittoo or, as petitioner suggests, they could not, as a simple matter of law and fairness, get the best of bothworlds at the expense of NASUREFCO.

Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives of management,

provided it is done in good faith. In the case at bar, private respondent union has miserably failed to convincethis Court that the petitioner acted implementing the JE Program. There is no showing that the JE Programwas intended to circumvent the law and deprive the members of respondent union of the benefits they usedto receive.

Not so long ago, on this particular score, we had the occasion to hold that:

". . . it is the prerogative of the management to regulate, according to its discretion and judgment, all aspectsof employment. This flows from the established rule that labor law does not authorize the substitution of the

judgment of the employer in the conduct of its business. Such management prerogative may be availed ofwithout fear of any liability so long as it is exercised in good faith for the advancement of the employer'sinterest and not for the purpose of defeating on circumventing the rights of employees under special laws orvalid agreement and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or outof malice or spite." 13

WHEREFORE, the impugned decision and resolution of respondent National Labor Relations Commissionpromulgated on July 19, 1991 and August 30, 1991, respectively, are hereby ANNULLED and SET ASIDEfor having been rendered and adopted with grave abuse of discretion, and the basic complaint of privaterespondent union is DISMISSED.

Narvasa, C . J ., Padilla, Nocon and Campos, Jr., JJ., concur.


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(1) That the complainant Union is the recognized sole and exclusive collective bargainingrepresentative of all the permanent rank-and-file employees of the Bank with an existingCollective Bargaining Agreement covering the period from July 1, 1974 up to June 30, 1977;

(2) That ... the standard workweek of the Bank generally consists of five (5) days of eight (8)hours each day which, . . . said five days are generally from Monday thru Friday; and, as arule, Saturdays, Sundays and the regular holidays are not considered part of the standard

workweek.

(3) That, in computing the equivalent daily rate of its employees covered by the CBA who arepaid on a monthly basis, the following computation is used, as per the provisions of Section4, Article VII, of the CBA (Annex "A"):

Daily Rate = Basic Monthly Salary plus CLA x 12 250

Basic Hourly Rate = Daily Rate 8

(4) That the divisor of '250', . . . was arrived at by subtracting the 52 Sundays, 52 Saturdays,the 10 regular holidays and December 31 (secured thru bargaining), or a total of 115 off-days

from the 365 days of the year or a difference of 250 days.

Considering the above uncontroverted facts, the principal question to be resolved is whetheror not the monthly pay of the covered employees already includes what Article 94 of theLabor Code requires as regular holiday pay benefit in the amount of his regular daily wage(100% if unworked or 200% if worked) during the regular holidays enumerated therein, i.e.,

Article 94(c) of the Labor Code.

In its latest Memorandum, filed on March 26, 1976, the Bank relies heavily onthe provisions of Section 2, Rule IV, Book 111, of the Rules and Regulationsimplementing particularly Article 94 (formerly Article 208) of the Labor Code,which Section reads as follows:

SECTION 2. Status of employees paid by the month -Employees who are uniformly paid bythe month, irrespective of the number of' working days therein with a salary of not less thanthe statutory or established minimum wage, shall be presumed to be paid for all days in themonth whether worked or not.

For this purpose, the monthly minimum wage shall not be less than the statutory minimumwage multiplied by 365 days divided by twelve. (Emphasis supplied).

While admitting that there has virtually been no change effected by Presidential Decree No.850, which amended the Labor Code, other than the re-numbering of the original Article 208of said Code to what is now Article 94, the Bank, however, attaches a great deal ofsignificance in the above-quoted Rule as to render the question at issue 'moot andacademic'.

On the other hand, the Union maintains, in its own latest Memorandum, filed also on March26, 1976, that the legal presumption established in the above-quoted Rule is merely adisputable presumption. This contention of the Union is now supported by a pronouncementcategorically to that effect by no less than the National Labor Relations Commission (NLRC)in the case of The Chartered Bank Employees Association vs. The Chartered Bank. NLRCCase No. (s) RB-IV-1739-75 (RO4-5-3028-75), which reads, in part, as follows:

. . . A disputable presumption was sea in that it would be presumed the salaryof monthly-paid employees may already include rest days, such asSaturdays, Sundays, special and legal holidays, worked or unworked, in

effect connoting that evidence to the contrary may destroy such a supposedlegal presumption. Indeed, the Rule merely sets a presumption. It does notconclusively presume that the salary of monthly-paid employees alreadyincludes unworked holidays. . . .

The practice of the Bank of paying its employees a sum equivalent to Basepay plus Premium on Saturdays, Sundays and special and legal holidays,destroys the legal presumption that monthly pay is for an days of the month.For if the monthly pay is payment for all days of the month, then why shouldthe employee be paid again for working on such rest days. (Emphasissupplied)


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There is no reason at present not to adopt the above ruling of the Honorable Comission,especially considering the fact that this Arbitrator, in asking a query on the nature of thepresumption established by the above Rule, from the Director of Labor Standards in thePMAP Conference held at the Makati Hotel on March 13, 1976, was given the categoricalanswer that said presumption is merely disputable. This answer from the Labor StandardsDirector is significant inasmuch as it is his office, the Bureau of Labor Standards, that isreportedly instrumental in the preparation of the implementing Rules, particularly on Book III

of the Labor Code on Conditions of Employment, to which group the present Rule underdiscussion belongs.

So, rather than rendering moot and academic the issue at hand, as suggested by the Bank,the more logical step to take is to determine whether or not there is sufficient evidence toovercome the disputable presumption established by the Rule.

It is unquestioned, and as provided for in the CBA itself, that the divisor used in determiningthe daily rate of the monthly-paid employees is '250'.

xxx xxx xxx

Against this backdrop, certain relevant and logical conclusions result, namely:(A) The Bank maintains that, since its inception or start of operations in 1954, all monthly-paid employees in the Bank are paid their monthly salaries without any deduction forunworked Saturdays, Sundays, legals and special holidays. On the other hand, it alsomaitains that, as a matter of fact, 'always conscious of its employee who has to work, onrespondent's rest days of Saturdays and Sundays or on a legal holiday, an employee whoworks overtime on any of said days is paid one addition regular pay for the day plus 50% ofsaid regular pay (Bank's Memorandum, page 3, filed January 21, 1976). . . .

xxx xxx xxx

On the other hand, there is more reason to believe that, if the Bank has never made anydeduction from its monthly-paid employees for unworked Saturdays, Sundays, legal andspecial holidays, it is because there is really nothing to deduct properly since the monthly,salary never really included pay for such unworked days-and which give credence to theconclusion that the divisor '250' is the proper one to use in computing the equivalent dailyrate of the monthly-paid employees.

(B) The Bank further maintains that the holiday pay is intended only for daily-paid workers. Inthis regard, the NLRC has this to say , in the same above-quoted Chartered Bank case:

It is contended that holiday pay is primarily for daily wage earners. Let usexamine the law, more specifically Article 95 (now Article 94) of the LaborCode to see whether it supports this contention. The words used in theDecree are 'every worker', while the framers of the Implementing Rulespreferred the use of the phrase 'all employees.' Both the decree itself and theRules mentioned enumerated the excepted workers. It is a basic rule ofstatutory construction that putting an exception limits or modifies theenumeration or meaning made in the law. it is thus easy to see that a merereading of the Decree and of the Rules would show that the monthly-paidemployees of the Bank are not expressly included in the enumeration of theexception.

Special notice is made of the fact that the criteria at once readable from theexception referred to is the nature of the job and the number of employeesinvolved, and not whether the employee is a daily-wage earner or a regular

monthly-paid employee.There is no reason at all to digress from the above-quoted observation of the HonorableCommission for purposes of the present case.

xxx xxx xxx

Finally, inasmuch as Article 94 of the Labor Code is one of its so-called self-executingprovisions, conjointly with its corresponding implementing Rules, it is to be taken to havetaken effect, as of November 1, 1974, as per Section I (1), Rule IV, Book III , of theImplementing Rules.


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Private respondent then appealed to the Secretary of Labor. On June 30, 1977, the Acting Secretary ofLabor reversed the NLRC decision and ruled that the appeal was filed on time and that a review of the casewas inevitable as the money claim exceeded P100,000.00. 5 Regarding the timeliness of the appeal, it waspointed out that the labor Department had on several occasions treated a motion for reconsideration (here, filedbefore the Arbitrator) as an appeal to the proper appellate body in consonance with the spirit of the Labor Code toafford the parties a just, expeditious and inexpensive disposition of their claims, liberated from the strict technicalrules obtaining in the ordinary courts.

Anent the issue whether or not the agreement barred the appeal, it was noted that the Manifestation, supra,"is not of slight significance because it has in fact abrogated complainant's commitment to abide with thedecision of the Voluntary Arbitrator without any reservation" and amounted to a "virtual repudiation of theagreement vesting finality" 6 on the arbitrator's disposition.

And on the principal issue of holiday pay, the Acting Secretary, guided by Policy Instructions No. 9, appliedthe same retrospectively, among other things.

In due time, the Union appealed to the Office of the President. In affirming the assailed decision, PresidentialExecutive Assistant Jacobo C. Clave relied heavily on the Manifestation and Policy Instructions No. 9.

Hence, this petition.

On January 10, 1981, petitioner filed a motion to substitute the Bank of the Philippine Islands as privaterespondent, as a consequence of the Articles of Merger executed by said bank and Commercial Bank &Trust Co. which inter alia designated the former as the surviving corporate entity. Said motion was grantedby the Court.

We find the petitioner impressed with merit.

In excluding the union members of herein petitioner from the benefits of the holiday pay law, publicrespondent predicated his ruling on Section 2, Rule IV, Book III of the Rules to implement Article 94 of thelabor Code promulgated by the then Secretary of labor and Policy Instructions No. 9.

In Insular Bank of Asia and America Employees' Union (IBAAEU) vs. Inciong, 7 this Court's Second Division,speaking through former Justice Makasiar, expressed the view and declared that the aforementioned section andinterpretative bulletin are null and void, having been promulgated by the then Secretary of Labor in excess of hisrule-making authority. It was pointed out, inter alia, that in the guise of clarifying the provisions on holiday pay, saidrule and policy instructions in effect amended the law by enlarging the scope of the exclusions. We further statedthat the then Secretary of Labor went as far as to categorically state that the benefit is principally intended for dailypaid employees whereas the law clearly states that every worker shall be paid their regular holiday pay-which isincompatible with the mandatory directive, in Article 4 of the Labor Code, that "all doubts in the implementationand interpretation of the provisions of Labor Code, including its implementing rules and regulations, shall beresolved in favor of labor." Thus, there was no basis at all to deprive the union members of their right to holidaypay.

In the more recent case of The Chartered Bank Employees Association vs. Hon. Ople, 8 this Court in an enbanc decision had the occasion to reiterate the above-stated pronouncement. We added:

The questioned Section 2, Rule IV, Book III of the Integrated Rules and the Secretary's PolicyInstruction No. 9 add another excluded group, namely, 'employees who are uniformly paid bythe month'. While the additional exclusion is only in the form of a presumption that all monthlypaid employees have already been paid holiday pay, it constitutes a taking away or adeprivation which must be in the law if it is to be valid. An administrative interpretation whichdiminishes the benefits of labor more than what the statute delimits or withholds is obviouslyultra vires.

In view of the foregoing, the challenged decision of public respondent has no leg to stand on as it waspremised principally on the same Section 2, Rule IV, Book III of the Implementing Rules and PolicyInstructions No. 9. This being the decisive issue to be resolved, We find no necessity to pass upon the otherissues raised, such as the effects of the Union's Manifestation and the propriety of applying PolicyInstructions No. 9 retroactively to the instant case.


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WHEREFORE, the questioned decisions of the respondent Presidential Executive Assistant and the ActingSecretary of labor are hereby set aside, and the award of the Arbitrator reinstated. Costs against the privaterespondent.

IT IS SO ORDERED.

Teehankee (Chairman), Plana, Relova, Gutierrez, Jr., and Patajo, JJ., concur.

Melencio-Herrera, J., took no part.


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However, as admitted by the respondent, the infraction of the above cited Code is punishableby reprimand to dismissal."

... . And in this case, while considering that complainant indeed committed the above-citedinfractions of company Code of Employee Discipline, We shall also consider his records ofuninterrupted twenty (20) years of service coupled with two (2) commendations for honesty.Likewise, We shall take note that subject offense is his first, and therefore, to impose the

extreme penalty of dismissal is certainly too drastic. A penalty short of dismissal is more inkeeping with justice, and adherence to compassionate society.

WHEREFORE, respondent Meralco is hereby directed to reinstate complainant Apolinario M.Signo to his former position as Supervisor Leadman without backwages, considering that heis not at all faultless. He is however, here warned, that commission of similar offense in thefuture, shall be dealt with more severely.

SO ORDERED.

Both parties appealed from the decision to the respondent Commission. On March 12, 1987, the respondentCommission dismissed both appeals for lack of merit and affirmed in toto the decision of the Labor Arbiter.

On June 23, 1987, the instant petition was filed with the petitioner contending that the respondentCommission committed grave abuse of discretion in affirming the decision of the Labor Arbiter. A temporaryrestraining order was issued by this Court on August 3, 1987, enjoining the respondents from enforcing thequestioned resolution of the respondent Commission.

The issue to resolve in the instant case is whether or not respondent Signo should be dismissed frompetitioner company on grounds of serious misconduct and loss of trust and confidence.

Petitioner contends that respondent Signo violated Sections 6 and 7 of the company's Code on EmployeeDiscipline, which provide:

Section 6, Par. 24 Encouraging, inducing or threatening another employee to perform anact constituting a violation of this Code or of company work, rules or an offense in connectionwith the official duties of the latter, or allowing himself to be persuaded, induced or influencedto commit such offense.

Penalty Reprimand to dismissal, depending upon the gravity of the offense.

Section 7, Par. 8 Soliciting or receiving money, gift, share, percentage or benefits from anyperson, personally or through the mediation of another, to perform an act prejudicial to theCompany.

Penalty Dismissal. (pp. 13-14, Rollo )

Petitioner further argues that the acts of private respondent constituted breach of trust and caused thepetitioner company economic losses resulting from the unbilled electric consumption of de Lara; that in viewthereof, the dismissal of private respondent Signo is proper considering the circumstances of the case.

The power to dismiss is the normal prerogative of the employer. An employer, generally, can dismiss or lay-off an employee for just and authorized causes enumerated under Articles 282 and 283 of the Labor Code.However, the right of an employer to freely discharge his employees is subject to regulation by the State,basically in the exercise of its paramount police power. This is so because the preservation of the lives of thecitizens is a basic duty of the State, more vital than the preservation of corporate profits (Euro-Linea, Phil.Inc. v. NLRC, G.R. No. 75782, December 1, 1987,156 SCRA 78).

There is no question that herein respondent Signo is guilty of breach of trust and violation of company rules,the penalty for which ranges from reprimand to dismissal depending on the gravity of the offense. However,as earlier stated, the respondent Commission and the Labor Arbiter found that dismissal should not bemeted to respondent Signo considering his twenty (20) years of service in the employ of petitioner, withoutany previous derogatory record, in addition to the fact that petitioner company had awarded him in the past,two (2) commendations for honesty. If ever the petitioner suffered losses resulting from the unlisted electricconsumption of de Lara, this was found to be the fault of petitioner's Power Sales Division.

We find no reason to disturb these findings. Well-established is the principle that findings of administrativeagencies which have acquired expertise because their jurisdiction is confined to specific matters aregenerally accorded not only respect but even finality. Judicial review by this Court on labor cases does not


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go so far as to evaluate the sufficiency of the evidence upon which the proper labor officer or office based hisor its determination but is limited to issues of jurisdiction or grave abuse of discretion (Special Events andCentral Shipping Office Workers Union v. San Miguel Corporation, G.R. Nos. L-51002-06, May 30,1983,122SCRA 557).

This Court has held time and again, in a number of decisions, that notwithstanding the existence of a validcause for dismissal, such as breach of trust by an employee, nevertheless, dismissal should not be imposed,

as it is too severe a penalty if the latter has been employed for a considerable length of time in the service ofhis employer. (Itogon-Suyoc Mines, Inc. v. NLRC, et al., G.R. No. L- 54280, September 30,1982,117 SCRA523; Meracap v. International Ceramics Manufacturing Co., Inc., et al., G.R. Nos. L-48235-36, July 30,1979,92 SCRA 412; Sampang v. Inciong, G.R. No. 50992, June 19,1985,137 SCRA 56; De Leon v. NLRC, G.R.No. L-52056, October 30,1980, 100 SCRA 691; Philippine Airlines, Inc. v. PALEA, G.R. No. L-24626, June28, 1974, 57 SCRA 489).

In a similar case, this Court ruled:

As repeatedly been held by this Court, an employer cannot legally be compelled to continuewith the employment of a person who admittedly was guilty of breach of trust towards hisemployer and whose continuance in the service of the latter is patently inimical to its interest.The law in protecting the rights of the laborers, authorized neither oppression nor self-destruction of the employer.

However, taking into account private respondent's 'twenty-three (23) years of service whichundisputedly is unblemished by any previous derogatory record' as found by the respondentCommission itself, and since he has been under preventive suspension during the pendencyof this case, in the absence of a showing that the continued employment of privaterespondent would result in petitioner's oppression or self-destruction, We are of theconsidered view that his dismissal is a drastic punishment. ... .

xxx xxx xxx

The ends of social and compassionate justice would therefore be served if privaterespondent is reinstated but without backwages in view of petitioner's obvious good faith.(Itogon- Suyoc Mines, Inc. v. NLRC, et al., 11 7 SCRA 528)

Further, in carrying out and interpreting the Labor Code's provisions and its implementing regulations, theworkingman's welfare should be the primordial and paramount consideration. This kind of interpretation givesmeaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of theNew Labor Code which states that "all doubts in the implementation and interpretation of the provisions ofthe Labor Code including its implementing rules and regulations shall be resolved in favor of labor" (Abella v.NLRC, G.R. No. 71812, July 30,1987,152 SCRA 140).

In view of the foregoing, reinstatement of respondent Signo is proper in the instant case, but without theaward of backwages, considering the good faith of the employer in dismissing the respondent.

ACCORDINGLY, premises considered, the petition is hereby DISMISSED and the assailed decision of theNational Labor Relations Commission dated March 12, 1987 is AFFIRMED. The temporary restraining orderissued on August 3, 1987 is lifted.

SO ORDERED.

Narvasa, Cruz, Gancayco and Grio-Aquino, JJ., concur.


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Manila

SECOND DIVISION

G.R. No. 143258 August 15, 2003

PHILIPPINE AIRLINES, INC., petitioner,vs.JOSELITO PASCUA, ROBERT ABION, IRENEO ACOSTA, GARY NEPOMUCENO, JASON PALAD,CEFERINO de la CRUZ, JOEL SALGADO, WILFREDO RIVERA, ALEXANDER ANORE, FERNANDOBACCAY, EDILBERTO FAUNE, REYMAR KALAW, GARY G. MARASIGAN, RODOLFO ODO,JONATHAN RENGO, ARTHUR APOSTOL, EDUARDO BALICASAN, MATHIAS GLEAN, ALINORMANHARANGOTE, CRISANTO CASTILLO, REX MARION CUERPO, EDGARDO del PRADO, RICARDOHERNANDEZ, PEDRO MERCADO JR., CESAR PAYOYO, RONALDO QUEROL, MAURELIO SIERRA,MANUEL VILLELA, LOUISEN FELIPE, LOBENEDICTO TIMBREZA, ANTONIO CABUG, ELISEOESPIRITU, ARNEL BAUTISTA, ANTHONY ROBLES, DENNIS ARANDIA, CHARLIE BALUBAL,RHODERIC BITAS, ORLANDO CANDA, CHARLIE de la CRUZ, RIQUESENDO de la FUENTE, RENODUQUE, JONATHAN FEBRE, ALVIN RIBERTA, NATHANIEL MALABAS, JUANITO SERUMA,FREDERICH de ASIS, ROMMEL ESTRADA, SYDFREY EVARISTO, ERICSON INTAL, FERDINANDGALANG, RUBEN PEROLINA, ROBERT McBURNEY, ENRIQUE SORIANO, ALVIN MANALAYSAY,NEMESIO MAALA, RAUL NEPOMUCENO, SAMUEL REYES, ERWIN MINA, MANUEL REYES,REYNALDO ORAPA, TEODORICO PADELIO, RANDY PIMENTEL, WILLIAM PATRIMONIO, JOELRAMOS, OLEGARIO REYES, RAUL OCULTO, ROGELIO OLQUINDO, and LARRYVILLAFLOR. respondents.

QUISUMBING, J .:

For review is the decision dated January 26, 2000 1 of the Court of Appeals and its May 23, 2000 2 resolutionin CA-G.R. SP No. 50351. The appellate court dismissed the petition for certiorari filed by petitioner tochallenge the NLRC decision dated January 23, 1998, 3 in NLRC NCR CA No. 010598-96, and likewisedenied their motion for reconsideration.

The antecedent facts, as summarized by the Court of Appeals and borne by the records, are as follows:

In April, August, and September of 1992, PAL hired private respondents as station attendants on a four orsix-hour work-shift a day at five to six days a week.

The primary duty of private respondents who were assigned to PALs Air services Department and ASD/CARGO was to load cargo to departing, and unload cargo from arriving PAL international flights as wellas flights of Cathay Pacific, Northwest Airlines and Thai Airlines with which PAL had service contract[s].

On certain occasions, PAL compelled private respondents to work overtime because of urgent necessity.The contracts with private respondents were extended twice, the last of which appears to have been for anindefinite period.

On February 3, 1994, private respondent Joselito Pascua, in his and on behalf of other 79 part-time stationattendants, filed with the Department of Labor and Employment a complaint for:

(1) Regularization

(2) Underpayment of wages

(3) Overtime pay

(4) Thirteenth month pay

(5) Service incentive leave pay

(6) Full time of eight hours employment

(7) Recovery of benefits due to regular employees

(8) Night differential pay


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(9) Moral damages and

(10) Attorneys fees,

which was docketed as NLRC NCR Case No. 00-02-00953-94.

During the pendency of the case, PAL President Jose Antonio Garcia and PAL Chairman & CorporateExecutive Officer Carlos G. Dominguez converted the employment status of private respondents fromtemporary part-time to regular part-time.

On February 24, 1995, private respondents dropped their money claim then pending before the Office ofExecutive Labor Arbiter Guanio, thus leaving for consideration their complaint for "regularization" -conversion of their employment status from part-time to regular (working on an 8-hour shift).

Finding private respondents remaining cause of action was rendered "moot and academic" by theirsupervening regularization and denying their prayer that their status as regular employees be givenretroactive effect to "six months after their stint as temporary contractual employees," the Executive Labor

Arbiter dismissed private respondents complaint.

On appeal, the NLRC, finding for private respondents, declared them as regular employees of PAL with aneight-hour work-shift. The pertinent portions of the NLRC decision reads:

Respondent admits that complainants have been performing functions that are considerednecessary or desirable in the usual business of PAL. There is no clear showing, however, thatcomplainants employment had been fixed for a particular project or undertaking the completion ortermination of which has been determined at the time of their engagement. Neither is there a clearshowing that the work or services which they performed, was seasonal in nature and theiremployment for the duration of the season. Complainants were simply hired as part-time employeesat the ASD and at the ASD/CARGO to do ramp services. 1wphi1

Complainants can therefore be considered as casual employees for a definite period during the first

year of their employment and, thereafter, as regular employees of respondents by operation of law.

As such, they should be entitled to the compensation and other benefits provided in the CollectiveBargaining Agreement for regular employees from or day after one year [of] service. Having beenpaid less than what they should receive, complainants are therefore, entitled to the differentials. 4

Petitioner promptly filed a motion for reconsideration of the NLRC decision, which was denied in an orderdated October 12, 1998. Consequently, petitioner filed with the Court of Appeals a special civil action forcertiorari to annul the NLRC decision. On January 26, 2000, the Court of Appeals dismissed the said petitionand by resolution issued on May 23, 2000, denied petitioners motion for reconsideration.

Hence, this appeal by certiorari where petitioner assigns the following errors:

- I -

THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE NLRC DECISION WHICHRULED ON THE MERITS OF THE COMPLAINT, DESPITE THE FACT THAT THE CAUSE OF

ACTION HAS ALREADY BECOME MOOT AND ACADEMIC WHEN THE PETITIONER ACCORDED REGULAR STATUS TO THE RESPONDENTS DURING THE ARBITRATIONPROCEEDINGS.

- II -

EVEN IF WE ASSUME FOR THE SAKE OF ARGUMENT THAT THE COMPLAINT HAS NOT BEENRENDERED MOOT AND ACADEMIC, STILL THE HONORABLE COURT OF APPEALS ERRED INUPHOLDING THE DECISION OF THE NLRC WHICH COMPELLED THE PETITIONER TOCHANGE THE RESPONDENTS EMPLOYMENT STATUS FROM PART -TIME TO FULL-TIME.5

Two principal issues need resolution: (1) Did petitioners act of converting respondents status fromtemporary to regular employees render the original complaint for "regularization" moot and academic? (2)Did the appellate court err when it upheld the decision of the NLRC to accord respondents regular full-timeemployment although petitioner, in the exercise of its management prerogative, requires only part-timeservices?

Petitioner conten ds that the NLRC could not change respondents status from part -time to full-timeemployment because respondents merely prayed in their original complaint for regular status as opposed to


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temporary or casual employment. Respondents temporary part -time status was already converted bypetitioner to regular part-time status at the arbitration level, to put an end to the controversy. That being thecase, the labor arbiter ordered the dismissal of the complaint for having become moot and academic,because the relief sought was already granted even prior to the termination of the dispute. Clearly, sayspetitioner, respondents cause of action for regularization had been extinguished when petitioner accordedthe respondents regular status. 6 It was grave abuse as well as error for the NLRC to touch the merits of anissue in effect already mooted at the arbiters level, according to petitioner.

On the second issue, petitioner argues that the NLRC could not lawfully impose the change of employmentstatus of respondents from part-time to full-time employees. 7 It has no authority or power to do so. Accordingto petitioner, management of its business is a matter that falls within the exclusive domain of the employer.

As such, only the employer, and no one else, should determine the number of employees to be hired, thetype of employees to be engaged, and the qualifications of each and every employee. The employer couldengage part-time employees if its operational needs require such part-time employees. The NLRC shouldnot substitute its judgment for that of the employer in this regard, says petitioner. 8

Respondents, in their comment, aver that the conversion of their employment status from part-timetemporary to part-time regular did not render inutile their original complaint, as in fact they have consistentlyasked for full-time regularization. According to respondents, in their pleadings they repeatedly sought notonly regularization but in fact they also asked entitlement to benefits of regular full-time employees. Further,respondents claim that since petitioner needs the services of private respondents for eight (8) hours or morea day, it is with evident bad faith that petitioner continues to categorize them as mere "part-timers" ratherthan full-timers so the company could avoid payment of corresponding benefits due to respondents. 9

On the first issue that the original complaint was rendered moot and academic by the subsequentregularization of respondents while the action was pending before the labor arbiter, we find that thepetitioners assertion is not entirely true nor accurate. Petitioner insists that all respondents sought was theconversion of their temporary employment status to regular employment, without asking for a change frompart-time to full time status. This claim, however, is belied by the very complaint initially filed with the laborarbiter. As stated by the OSG in its comment to the petition filed with the Court of Appeals, which we nowquote aptly:

However, a thorough scrutiny of the appeal reveals that despite its lack of preciseness, privaterespondents were, in fact, ultimately assailing their part-time status, not just the retroactive date oftheir regularization as part- time employees. They contradicted the Labor Arbiters perception thathiring of part-time employees was justified by the peculiar nature of airport operations. Besides, evenpetitioner understood the heart of the appeal when it observed in their Answer to Appeal that "[a]llthat they wanted is to be converted to full time status."

The pleadings filed by private respondents consistently show that they wanted to become regular full-time employees, not only regular part-time employees. Although they repeatedly said "regularemployees," not specifying whether it should be regular part-time or regular full-time, their intentionshould be read from the entirety of all their pleadings. Private respondents have consistently allegedthat despite their part-time status, they actually work more than 8 hours daily. Private respondentJoselito Pascua confirmed this when he testified on November 24, 1995 (TSN, November 24, 1995,pp. 35-36). Ultimately, they want to be entitled to the many collective bargaining agreement (CBA)benefits which would be possible only if they were regular full-time employees since regular part-timeemployees are covered by the Personnel Policies and Procedures Manual, the relevant portion ofwhich was introduced only for the first time in this Court. While regular part-time employees havetheir own package of benefits, it is safe to infer that the benefits under the CBA are better, being aresult of negotiation, than those provided under the Personnel Policies and Procedures Manualwhich are unilaterally handed down by petitioner. 10

An issue becomes moot and academic when it ceases to present a justiciable controversy, so that adeclaration on the issue would be of no practical use or value. In that situation, there is no actual substantialrelief to which respondents would be entitled and which would be negated by the dismissal of their originalcomplaint. 11 Here, it is readily apparent that the dismissal of the original complaint by the labor arbiter would

negate the substantial relief to which respondents would have been entitled. They seek regular full-timeemployment and this claim is fully set forth in the original complaint. They specifically prayed for entitlementto benefits due to a regular full-time employee with seniority rights. 12 The mere regularization of respondentswould still not entitle them to all benefits under the CBA, which regular full-time employees enjoy. In fact,regular part-time employees are covered by the benefits under Personnel Policies and Procedures Manual,not the CBA. The dismissal then of the complaint by the labor arbiter is reversible error, and the NLRC stillacted within its power and authority as a quasi-judicial agency in finding that respondents deserve more than

just being regular employees but must be regular full-time employees.

We now come to the second issue, which touches on the valid exercise of management prerogative. According to petitioner, NLRC encroached upon this exclusive sphere of managerial decision, when it ruled


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Manila

FIRST DIVISION

G.R. No. 154448 August 15, 2003

DR. PEDRITO F. REYES, Petitioner,vs.COURT OF APPEALS, PHIL. MALAY POULTRY BREEDERS, INC. and LEONG HUP POULTRY FARMSDN, BHD., Mr. Francis T.N. Lau, President and Chairman of the Board and Mr. Chor Tee Lim,Director, Respondents.

D E C I S I O N

YNARES-SANTIAGO, J .:

Assailed in this petition for review under Rule 45 of the Revised Rules of Court are the January 28,

200 21 and July 22, 200 22 Resolution s 3 of the Court of Appeals in CA-G.R. SP No. 67431, which dismissedthe petition for certiorari filed by petitioner for failure to attach to the petition the duplicate original or certifiedtrue copy of the Labor Arbiters decision as well as the relevant pleadings.

The facts show that on August 24, 1989, respondent Leong Hup Poultry Farms SDN. BHD (Leung Hup) ofMalaysia, thru its Managing Director Francis T. Lau, appointed petitioner Pedrito F. Reyes asTechnical/Sales Manager with a net salary of US$4,500.00 a month. His duties consisted of selling parentstock day-old chicks and providing technical assistance to clients of the company in Malaysia and other

Asian countries .4 Sometime in 1992, the company formed Philippine Malay Poultry Breeders, Inc.,(Philmalay) in the Philippines. Petitioner was appointed General Manager thereof with a monthly salary ofUS$5,500.00.

In 1996-1997, respondents suffered losses which caused them to reduce production and retrench employeesin Philmalay. On June 30, 1997, petitioner gave verbal notice to respondent Francis T. Lau that he will serveas General Manager of Philmalay until December 31, 1997 only .5 In a letter dated January 12, 1998,petitioner confirmed his verbal notice of resignation and requested that he be given the same benefitsgranted to retrenched and resigned employees of the company, consisting of separation pay equivalent to 1month salary for every year of service and the monetary equivalent of his sick leave and vacation leave. Helikewise requested for the following:

1. payment of underpaid salary for the period December 1989 December 31, 1997 together withthe additional one month salary payable in December of every year which was paid at the rate ofP26.00 instead of the floating rate;

2. brand new car (Galant Super Saloon) or its equivalent;

3. life insurance policy in the amount of US$100,000.00 from December 1, 1989 to December 31,1997, or the premiums due thereon;

4. office rentals at the rate of US$300.00 or its peso equivalent for the use of his residence as officeof Philmalay for the period December 1, 1989 to July 1996; and

5. retention of the services of the law firm Quasha Ancheta Pena and Nolasco Law Firm, which washired by respondents to defend him in the illegal recruitment case filed against him in connection withhis employment with respondents .6

In a letter dated January 19, 1998, respondent Philmalay retrenched petitioner effective January 20, 1998and promised to pay him separation benefits pursuant to the provisions of the Labor Code .7 He was,however, offered a separation pay equivalent to four months only, or the total amount of P578,600.00(P144,650 x 4). The offer was not accepted by petitioner and efforts to settle the impasse proved futile.

Petitioner filed with the Arbitration Branch of the National Labor Relations Commission a complain t8 forunderpayment of wages and non-payment of separation pay, sick leave, vacation leave and other benefitsagainst respondents.

On December 22, 1999, the Labor Arbiter rendered a decisio n9 in favor of petitioner, the dispositive portion ofwhich reads:
http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt1http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt1http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt1http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt2http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt2http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt2http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt3http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt3http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt3http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt4http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt4http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt4http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt5http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt5http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt5http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt6http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt6http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt6http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt7http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt7http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt7http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt8http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt8http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt8http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt9http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt9http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt9http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt9http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt8http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt7http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt6http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt5http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt4http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt3http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt2http://www.lawphil.net/judjuris/juri2003/aug2003/gr_154448_2003.html#fnt1


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PREMISES CONSIDERED, judgment is hereby rendered in favor of the complainant and against therespondents, as follows:

1. To order respondents to pay jointly and severally the complainant, the following:

(a) Unpaid salary from January 1, 1998 to January 19, 1998, the same to be computed in thefollowing manner:

19 = days % 31 days of January 98

= 0.613 month x US$5,500.00

= US$3,370.00

(b) Underpayment of salary, the same to be computed at net US$5,500.00 or its peso-equivalent from July 1, 1997 to December 31, 1997, together with the additional one (1)salary payable every year, the same to be paid at the rate of P26.30 instead of the followingrate computed as follows:

July 1997 - P27.66 P1.36 - P7, 480.00

August 1997 - 29.33 3.02 - 16, 665.00

September - 32.39 - 6.09 - 33, 495.00

October 1997 - 34.46 - 8.16 - 44, 880.00

November 1997 - 34.51 - 8.21 - 45, 155.00

December 1997 - 37.17 - 10.57- 59, 785.00

P207,460.00

(c) 13th month pay for December 1997 computed as follows: December 1997 P37.17 P10.57 P59,785.00.

2. To order respondents to pay jointly and severally the complainant the following:

(a) Unused vacation and sick leaves from December 01, 1989 to December 31, 1997 basedon the same salary, to be computed as follows:

i) Vacation Leave Fifteen (15) days for every year of services x 9 years = 135 days

135 days % 26 working days a month

= 5.2 months

= US$28,600.00

ii) Sick Leave Fifteen (15) Days for every [year] of service x 9 years = 135 days

135 days % 26 working days a month

= 5.2 months x US$5,500.00 / month

= US$28,600.00

3) To order respondents to pay jointly and severally the complainant his separation pay equivalent toone (1) month pay for very year of service at the rate of US $5,500.00 or its peso equivalent fromDecember 1, 1989 to January 19, 1998, computed as follows:

9 years x US$5,500.00 = US$49,500.00

4) To order respondents to pay jointly and severally the complainants other claims and benefits:


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a) A brand new car (Galant super saloon) or its equivalent in the sum of P945,100.00;

b) Office rentals for the use of his residence situated at No. 38 Don Wilfredo St., Don EnriqueHeights Diliman, Quezon City, [from] 01 December 1989 to July 1996 at the rate ofUS$300.00 or its peso equivalent to US$23,700.00;

c) Life insurance policy for US$100,000.00 from December 1, 1989 to December 31, 1997, or

if the same was not secured the premiums due thereon for the above period, the same to becomputed as follows:

US$2,736.50 x 9 years = US$24,628.50

d) The services of the Law firm of Quasha Ancheta Pea and Nolasco be continued to beretained by the two (2) companies to represent complainant in the illegal recruitment casebefore the Regional Trial Court of Quezon City, Branch 96, docketed as Crim. Case No. Q-93-46421, entitled "People of the Philippines vs. Dr. Antonio B. Mangahas, et al.," filedagainst him in connection with his employment by Leong Hup, or in default thereof to pa ythe attorneys fees of the new counsel, that may be hired by the complainant to defend him inthe said case estimated in the sum of P200,000.00, more or less;

5) To order the respondents to pay jointly and severally the complainant moral damages in the sumof P2.5 million and exemplary damages of P2.5 million;

6) To order the respondents to pay jointly and severally the complainant in the sum equivalent to tenpercent (10%) of the total claim as and for attorneys fees.

7) Respondents counterclaims are h ereby dismissed for lack of merit.

SO ORDERED .10

On appeal by respondents to the National Labor Relations Commission (NLRC), the Decision of the Labor

Arbiter was modified by deleting the awards of (1) US$3,370.00 representing unpaid salary for the periodJanuary 1, 1998 to January 19, 1998; (2) US$28,600.00 as vacation leave; (3) brand new car or itsequivalent in the sum of P945,100.00; (4) US$23,700.00 as office rentals for the period of December 1,

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